Unilever, owner of Marmite, Dove and Ben & Jerry’s, defended the price increases despite a higher-than-expected profit increase of 17%.
Unilever, a London-based company, announced that its profit margins increased 2.5 points to 19,6% in the first half of the calendar year. This was well ahead of analyst estimates. Prices rose by 1.6%. The underlying operating profit increased by 17.1% on an annual basis to €6.1bn (£5.14bn ) in the six months to June.
The company’s profit margins were boosted by “carryover pricing from an inflationary period” as well as the efficiency gains from selling more premium brands and products.
Unilever, a London-based company, reported that its profit margins rose 2.5 points to 19,6% in the first half of the fiscal year – far exceeding analyst expectations – as prices increased 1.6%.
Hein Schumacher is the CEO of Unilever. He said, “We did not pass all the inflationary impacts to consumers over the last year.”
Unilever reported that the trade in South-East Asia had been affected by a boycott of western brands due to the events in Gaza.
In China, Cornetto sales fell due to “challenging markets dynamics” and unseasonable weather conditions in Europe. Unilever stated that it is “on track” for demerging its ice cream business, including Magnum and Wall’s by the end 2025.
Nestle had a tough half-year, warning that sales growth in the next six month would be about a quarter lower than expected, at around 3%. Owner of KitKats, Purina cat foods and Nescafe, the company reported that sales for pet food, nutrition and ice cream had fallen short of expectations. Analysts said there was a lackluster demand in China, and that price competition had been fierce elsewhere.
Jefferies analysts suggested that there were “signs” of reduced pricing and “concerns” about the “strength of brands in this environment”, as households felt cost-of-living pressure, leading them to look at supermarket own-label brands to replace well-known brands.
Schumacher stated that Unilever expects profit margins of at least 18% for the second half year, as the prices in the grocery industry will continue to rise by 2% to 3% until next year.
Fernando Fernandez said Unilever’s finance director that wage inflation “remains substantial” and that the company would not pass on all of these costs to the consumer as it wanted to maintain brand competitiveness.
Schumacher stated that the group has seen an increase in promotional activity in Europe, and a deflation of some developing markets like India. Promotions in North America have remained constant.
Unilever is still trading in Russia and causing controversy, as many western brands are no longer present since the invasion of Ukraine.
Schumacher stated that the company “localised its operations” in Russia, and the goal of the company was to “minimise the economic contribution” the state. This is a very difficult situation that I am very concerned about. “We continue to closely monitor the operations in that area,” he said.
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